How Long Do You Have To Pay If You Owe Money Following a Tax Audit?
Fortunately, most taxpayers will not experience tax audits. In GOBankingRates’ 2023 tax survey, 81% of respondents said they had never been audited before.
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Not everyone who is selected for an audit is chosen because there is a problem. If there is a question about your tax return, however, the IRS may conduct an interview with you over the phone and/or in person to review your records.
If you owe money following a tax audit, here’s what you need to know.
How Long Do You Have To Pay?
The IRS collection process is outlined in Publication 594. If you owe money and agree with the bill, you must pay the full amount before the due date.
Tom Wheelwright, CPA and CEO of WealthAbility, said taxpayers typically have 90 days to make payment. Similar to paying tax returns, taxpayers may make payments with checks or online.
From the time you file your tax return, the IRS has three years to begin an audit. If the IRS starts an audit and needs more time, Wheelwright said, they will ask you to extend the statute of limitations. The timeframe for this is similar to that of a tax audit. It can take between six months and three years to complete.
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How Do You Pay in Full?
There are several ways you can make payment. Here are the options recommended by the IRS:
- Electronic payments. Make a payment online through IRS.gov/payments, over the phone or through the IRS2Go app.
- IRS Direct Pay. You may visit IRS.gov/DirectPay and make secure payments from your checking or savings account without paying additional fees.
- Credit or debit card. You may use either your credit or debit card.
- IRS2Go. This is the IRS app that allows you to make a secure payment directly from your bank account. IRS2Go may be downloaded from the Apple app store, Google Play or Amazon Appstore.
- Electronic Federal Tax Payment System (EFTPS). You may enroll in this free service to safely pay for individual and business taxes online or by phone.
- Cash. This option is available if you don’t have a bank account. More details may be found through the IRS here. However, the IRS recommends you avoid this option as it is possible to incur interest and penalty charges.
What If You Can’t Pay in Full?
Per the IRS, here are the recommended options for what to do next if you owe money:
- Apply for an installment agreement. This is a payment plan offered by the IRS that allows taxpayers to make small payments over time until the balance is completely paid off. Payments may be made using direct debit, payroll deductions, checks or electronic funds transfer. Taxpayers may apply for installment agreements online using the Online Payment Agreement application, by calling 1-800-829-1040 or by completing and mailing Form 9465. It is also possible to apply in-person by visiting a local IRS office.
- Cash. This option is available if you do not have a bank account. Similar to making a payment in full, the IRS urges taxpayers to choose other options besides cash to avoid interest and penalty charges.
- Paying by mail or in person. You may mail a check to the address listed on your notice or bring a check to your local IRS office. Make the check payable to the Department of Treasury.
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